US ban on diesel fuel exports could whip up gasoline prices, expert says

MOSCOW, September 30. /TASS/. A possible US ban on diesel fuel exports after storages have been filled could force refineries to cut operations, which would reduce gasoline and jet fuel production and boost their prices, Oleg Nikolayev, an expert at the Institute for the Economy of Growth, Stolypin P. A. and a member of the General Council of Delovaya Rossiya, told TASS.

Earlier, CNBC reported that a US ban on diesel fuel exports could drive up European prices to unprecedented highs. Over the past few months, about half of the diesel fuel supplied to Europe came from the US, experts note. However, most European oil traders doubt that Washington will take such a step because it will pose a serious challenge to the US oil companies.

"Once all possible volumes of diesel fuel storages are filled (and this will happen in about a month), refineries will be forced to reduce oil refining. That is, there will be less gasoline and jet fuel in America, and their prices will start to rise. The situation is called 'pulling out the nose and getting the tail stuck,'" Nikolayev said.

According to him, the measure could backfire.

"A possible ban on diesel fuel exports from the United States would have too many negative side effects for the United States itself," he said.

Nikolayev said that a significant portion of the US diesel fuel is exported.

"It is worth recalling that over the past 20 years, the United States has transformed from a net importer of petroleum products into the world’s largest exporter of diesel fuel. American oil refineries currently produce about 5.1-5.2 million barrels of diesel per day, and up to 30% is exported," he said.

Damage to producers

According to the expert, the ban will also hit revenues of US producers.

"The export revenue of American producers from diesel fuel amounts to about $150 million per day, or $55 billion per year. If the ban is imposed, then 1.5 million barrels per day will either have to be stored or sold on the domestic market at falling prices," he said. "For the voter, this will have a temporary effect (although there’s little that will save the Republicans in the upcoming elections anyway), but the industry giants will perceive it as nothing less than the president’s hand reaching into their pockets," Nikolayev concluded.